Court Upholds Rectification of Clerical Error in Assessment Order under Income Tax Act

The appeals were filed by the Assessee companies against the orders dated 30.05.2019 of CIT(A)-34, New Delhi, challenging the orders dated 29.01.2019 passed u/s 154 of the Income Tax Act by the ld AO, DCIT, Circle-12(2), New Delhi. The mistake in the assessment order regarding the Assessee's name was rectified u/s 154, which was upheld by the court. The error was deemed clerical and did not impact the case's merits. The court ruled that such errors can be rectified without a hearing, and both appeals were dismissed.

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Issues:
Rectification u/s 154 of the Income Tax Act - Scope and Limitations

Analysis:
The appeals were filed by the Assessee companies against the orders dated 30.05.2019 of CIT(A)-34, New Delhi, challenging the orders dated 29.01.2019 passed u/s 154 of the Income Tax Act, 1961 by the ld AO, DCIT, Circle-12(2), New Delhi. The Assessee, M/s. Escorts Hospital and Research Centre Ltd, got merged with appellant International Hospital Ltd as per the scheme of amalgamation approved by the Hon'ble High Court of Punjab and Haryana. However, a mistake was made in the assessment order where the name of the Assessee was mentioned as M/s Escorts Hospital and Research Centre Limited instead of the amalgamated company. The Ld. AO rectified this mistake u/s 154 of the Act, which was challenged by the Assessee before the ld CIT(A).

The Assessee contended that the scope of rectification u/s 154 is limited and the Ld. AO was trying to undo something that was already a ground of appeal pending before the ld CIT(A). On the other hand, the ld DR argued that there was no error in the impugned order. The bench, after considering the facts, opined that the error in the title of the assessment order was a clerical mistake and did not affect the merits of the case. The Ld. AO had acknowledged the amalgamation in the body of the assessment order, indicating that the assessment was completed with the continuity of the legal entity of the Assessee into the amalgamated company.

The judgment highlighted that any error in the title of a judicial or quasi-judicial order is a defect of a clerical nature and does not signify any illegality in the decision-making process. It was emphasized that every judicial and quasi-judicial authority possesses inherent powers to correct such clerical errors. The bench concluded that the error in mentioning the correct name of the Assessee in the assessment order did not invalidate the Ld. AO's decision to rectify it u/s 154. It was ruled that no opportunity of hearing was required in such cases, and the orders of the Ld. AO and the ld CIT(A) were upheld. Ultimately, the grounds of appeal were deemed to have no substance, and both appeals were dismissed.

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